I’m in CA, male, and over 50. Santa Clara County in CA, to be more precise.
Just got my car insurance bill and it’s up more than 25% this year. No changes (other than I’m a year older) and no tickets of either the moving or non-moving variety. My insurance guys is telling me that “rates are going up for everyone”, but I’m having a hard time believing that a > 25% increase in one year is somehow normal.
It’s legit. Insurance companies are losing their asses for lots of reasons. Most frequently cited, predictably, are natural disaster-related claims (hurricanes, hail, wildfires, etc.), increases in claim frequency and severity, and various plaintiff-friendly state supreme court decisions. Keep in mind your rates are not only influenced by loss history in California, but every place your company has a presence. So if a storm surge floods a major metropolitan area, and totals every car within, say, a mile of the coast you’re going to feel it 1500 miles away.
I think it’s going to get worse. Rate hikes are only one tool used by insurance companies to remain afloat. But they don’t want to overplay that one because it tends to drive off business. The employees eat the rest of the sandwich, taking on ridiculous work loads, medieval working conditions, and less pay. That tends to drive off the expensive/experienced employees. Service standards plummet, customers get disgruntled setting off an expensive feedback loop involving underwriting and claims costs.
So, expect more increases with lower quality service.
It’s not “normal” in the sense of “common” but it can be “normal” in the sense of “part of the ordinary business process” with nothing else at work.
I recall increases close to that amount (a bit lower but pretty high up there) explained to me at the time as being a rerating that applied to everyone in that area/category.
What happens is the the company’s actuaries look at some zone or risk factors and decide that they’re losing money on this subgroup and need to jack up rates on this group. Or they could even be changing the way they classify things, e.g. looking at new risk factors or combining or remeasuring old ones.
Of course, they’re aware that they might lose a lot of business from the people in the category whose rates are being jacked up 25%. But since they’re convinced that they’re losing money on this subgroup anyway, it’s no big loss.
It’s important to realize that different companies rate things very differently. Along the lines described above, they might use different risk factors, value the risk factors differently, and so on. That’s why you can get wildly varying prices from different carriers (which is why every insurance company can accurately advertise that “the average person who switches to our coverage saves X%”.)
Bottom line is if you get a big increase it pays to look around.
Though one thing about the online price quoters - they don’t really deliver what they say. Specifically, you think you’re going to enter all your information once and have them feed this info to all sorts of different carriers who will all email you quotes. Not how it works, IME. Generally, they just forward your contact info and some sketchy details to a bunch of agents (who pay their fees). All these agents then contact you via phone or email and request that you spend 15 minutes going over your info before they’ll give you a quote.
Insurance rates are ultimately determined by the competitive market for risk, not by a particular company’s geographic presence and history of unrelated losses. It doesn’t generally make sense for a company to raise rates for insurance in (say) a profitable New Mexico market because of (say) perceived higher flood risk after losses in Texas, otherwise a competitor will just step in and take away all that profitable business in New Mexico.
Having said that, I won’t deny that what you say happens sometimes, just because companies do make poor business decisions like that, and they sometimes don’t have sufficient granularity in their actuarial models to differentiate among markets with different true risk profiles. And markets sometimes just seem to be all over the place, with rates between different companies wildly different. So if the insurer who used to be 30% cheaper for you than any other company jacks their rates for reasons like you describe, obviously it was already clear that nobody wanted to compete with them in your market, so that’s bad news.
Progressive (a US auto insurer) has a thing called Snapshot, which is a little plastic-housed chip that plugs into the OBD port. It detects heavy braking and acceleration, travel time and distance, and the hours when you drive (or at least it did in 2014 when I used it). I found the “heavy braking” threshold to be silly, as did the guy who wrote the linked article, and it incentivizes red-light running among other dangerous behaviors. However, I did ultimately save about $4 a month.
That depends on the jurisdiction. In Florida, and I assume other states, rate increases are limited by the state insurance commissioner based on in-state loss experience only.
Beyond that, there’s also a difference in the company’s risk tolerance based on their overall profitability.
Because despite the efforts of actuaries and underwriters, no one really knows what the future holds, and the best of assumptions has some variance to it. So there’s always a question of whether to use more conservative versus more aggressive assumptions.
In general there tends to be conflict in this area between the marketing/sales guys, who need low prices to increase sales and tend to favor more aggressive assumptions and lower rates, and the actuaries/underwriters, who tend to get blamed if the products lose money and who favor conservatism :). If the company is doing well for a few years this empowers the sales guys and marketing-friendly assumptions have the upper hand, but if the company is going through hard times this empowers the actuaries and caution prevails.
I make installment payments on mine, one payment a month. It goes up by a couple of bucks a month every year, nothing drastic. It’s still about twice as cheap as the insurance from my previous company.
I have about the same circumstance save being somewhat under fifty, no moving violations or accidents at fault in over a decade, and mine hiked slightly more than that. I called and asked about the hike assuming it to be related to the two claims I made in the last couple of years (one was a sideswipe while parked by a hit-&-run driver, the other was being rammed while stopped at a red light by a police cruiser) bit was told that it was just an across the board increase, and I managed to get it knocked down slightly as a “Good Driver” reduction they should have been applying anyway.
I’m generally skeptical of insurance companies claiming they have to hile rates or exit markets because they can’t return a profit, but this article in Forbes makes a good case for the causality for auto insurers. Interestingly, it also concludes with an observation about autonomously piloted vehicles:
*One possible positive disruptor as far as accidents go is the rollout of self-automated cars. The NHTSA once found that 93% of car accidents are a result of human error; if a computer can more safely drive your car for you (a big if at the moment, admittedly), we may experience dramatically fewer accidents on roads. However, self-driver vehicles aren’t expected to be fully be implemented until 2030, and how much, if at all, they’ll make roads safer will become clearer only as that year approaches.*Their timeline for widespread availability of autonomous vehicles corresponds with my own expectation and that of many observers (15–20 years) but if anything I expect that to result in insurance premiums for non-autonomous vehicles to go up as autonomous vehicles will have far fewer accidents and will largely be owned by fleet companies which provide the in a subscription or pay-by-use rather than private ownership, which means that they’ll have greater bargaining power than individual drivers, and there will be progressively fewer licensed drivers requiring insurance. So, I wouldn’t expect car insurance to get cheaper, period.